Prom Spending Up, but Not All Small Businesses Partying

So says boutique owner Tina Loyd, who runs the Dallas prom-shopping destination Terry Costa. And while a $5,000 dress may not be the norm, the average teen doesn’t seem to be skimping when it comes to prom spending.

A new survey from Visa found teens are spending an average of $1,078 on the prom, a 33% increase since 2011. And families in the Northeast and the South spend the most: $1,944 and $1,047 per student respectively.

FOXBusiness.com spoke with small business owners in those top-selling regions to see whether their bottom lines are rising as a result of prom mania.
Ecommerce Eats Away at Profits for Dress Stores
Aside from the couture gowns, Loyd says she has a wide range of price points for prom dresses at her 14,000-square foot store.

“Most fall in the $300 to $400 range,” she says, “and some come in willing to spend, but others come in on a budget.”

But while Loyd says sales have been pretty steady over the past few years – even during the recession – she says “showrooming” is a growing issue at her store. Girls come in, try on a few dresses … and then buy their favorite at an online shop for a lower price.

“We’ve had to be very proactive in making sure we are offering one of the lowest prices out there, and that no one else is going below the manufacturer’s suggested retail price,” says Loyd. She says she's trying to educate consumers on what she sees as the dangers of ordering gowns online for a great deal, after seeing girls receive dresses that were cheap knockoffs from China – and not at all like the online photos.

At Rissy Roo’s in Linwood, New Jersey, Melissa Sharp says business is up – but customers are still cautious.

“Even in tough times, people will spend their last dime on their babies – but we try to offer dresses in every price range,” says Sharp. The average dress is priced between $300 and $350, but Sharp says she does sell $800 dresses from time to time.

For her store, showrooming hasn’t been a huge issue, because Sharp says Rissy Roo’s prices all the dresses exactly at the suggested retail price. “You can’t get away with a markup, because of online shopping,” she says.

In Marksville, Louisiana, Britt’s Bridal owner Rhonda Lacombe says she hasn’t seen an increase in dress sales over the past few years, but when it comes to tuxes, it’s a different story.

“We’re up on numbers and dollars, and we’re the only tuxedo store around here,” says Lacombe.
Discount Shopper a Plus for Consignment Stores
Though the Visa survey suggests consumers are feeling more comfortable with spending, consignment stores specializing in formalwear are seeing an uptick in business, suggesting that many are still looking for a great deal.

In Lilburn, Georgia, Forever Young manager Rachel Pendley says shoppers from Atlanta and all over the county come to shop for discounted, gently worn dresses.

“Competitors around here sell dresses starting at $300, and that’s our highest end,” says Pendley, who boasts that the store has a ton of options under $100.

Pendley says the economy has been working to Forever Young’s advantage: “We’ve had growth every year.”

At Emma’s Consignment in St. Augustine, Florida, owner Robin Risner says business has increased year over year since she opened the consignment store five years ago. “People think it’s smart business to get a good dress at a good price. You don’t have to spend full retail to get something really great,” she says.
Business Booming for Salons, but Limos Hit a Bump
Salon owners say teens are spending more on hair, makeup and tanning – and it’s been great for business.

“There are definitely more appointments for prom this year,” says Head Candy owner Robin Dorton. Though the salon just opened in December, Dorton and all the stylists came from other salons in the Cherry Hill, New Jersey area and say they have noted an increase since 2012.

What’s more, Dorton says 95% of her clients who come in to get their hair done are also paying for an expert makeup application.

“During the recession, they’d come in and just buy a lipstick, rather than paying to get their makeup done,” says Dorton.

She says her customers seem much more comfortable turning prom into an extravagant affair. “A regular client of mine came in with her daughter, and her friend’s mother had hired a photographer. And at the salon, we did a photo shoot for different prom styles and tried to get a limo, but they were all booked because of prom!” says Dorton.

In Hunt Valley, Maryland, Bee Beautiful owner Nancy Boltz says she’s seen a 20% increase in business over last year.

“I’m surprised that so many are getting their makeup professionally done here,” says Boltz.